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Climate Change for the GOP

It’s time for a conservative alternative to liberal alarmism.

Jul 8, 2013, Vol. 18, No. 41 • By ELI LEHRER
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The legislation itself, however, would have done almost nothing to combat climate change. Indeed, largely as a result of the natural gas boom that many environmentalists continue to try to stymie, the United States appears likely to meet Waxman-Markey’s 2020 emissions targets even though the bill was never signed.

While Democrats in Congress have floated other plans, they are mostly more of the same, relying on subsidies, handouts, punishments, and more government control over the economy. It is time for a conservative alternative that would remove burdensome regulation, cut taxes on productive economic activity, and encourage energy development (particularly of natural gas), all while also taking steps to reduce the chances that the worst climate scenarios will come to pass.

A market agenda for climate change should begin with a sober assessment of the energy regulations America already faces. Through existing statutory authority, the federal government has control over carbon emissions and imposes a “price” already, one that will rise as a result of Obama’s latest actions. Ever since the Supreme Court ruled in 2006 that the Clean Air Act essentially required the Environmental Protection Agency to regulate greenhouse gases, the EPA has had carte blanche to impose new rules to deal with them.

But even if the Supreme Court was right to grant the powers Obama now seeks to use (and that point is debatable), the mechanism in question is a terrible way to regulate greenhouse gases. A creature of the 1970s regulatory state, the Clean Air Act provisions at the center of Obama’s proposal were written with pollutants like sulfur dioxide and nitrogen oxides in mind. Unlike carbon dioxide—which isn’t intrinsically harmful to humans at atmospheric concentrations, is absolutely necessary to plant life, and, in any case, is exhaled by every land-based animal with every breath it takes—these pollutants come from a small number of easy-to-identify sources and can harm human health. It was well worth trying to reduce them to very low levels. 

Trying to regulate carbon emissions by the same means is almost certain to produce hugely expensive and burdensome regulations. No matter the pleasing-sounding noises emanating from Washington about “flexibility” and working with individual states, using the Clean Air Act to regulate carbon dioxide is akin to trying to repair a fine wristwatch with a jackhammer. Even the regulation-happy Waxman-Markey bill explicitly acknowledged this by ending the EPA’s authority to regulate carbon dioxide. That was its one and only good provision. And removing this regulatory authority—almost sure to be used both arbitrarily and inefficiently—ought to rank near the top of any sensible, limited-government agenda. Republicans should also go up against Obama’s promise to delay the Keystone XL pipeline until it meets certain greenhouse gas targets.

Since carbon emissions do present a real problem, simply repealing the current regulations without replacing them would be both unwise and politically impossible. The least-intrusive and most economically beneficial way to deal with the problem appears to be a carbon tax, particularly a revenue-neutral carbon tax that could be used to offset and/or replace other taxes. As Florida State University economist Shi-Ling Hsu argues in his The Case for a Carbon Tax, such a tax would cause minimal dislocations, actually do quite a lot to reduce carbon emissions, and avoid the potentially destructive central planning implicit in almost every other solution, including the one Obama has proffered.

Even better, from a conservative perspective, such a tax could be used to offset taxes on productive activities. Replacing some or all taxes on capital gains, corporate income, or personal income with a carbon tax could simultaneously increase the efficiency of the country’s tax system while cutting taxes on truly productive economic activity like jobs and investment. In fact, the carbon tax’s most prominent proponents include conservative economic thinkers like Art Laffer and American Enterprise Institute scholar Kevin Hassett.

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